Insurance issues stem from changes in law practice

Published 7:00 pm, Tuesday, June 18, 2002

Increases in both homeowner's insurance rates and medical malpractice insurance rates have potentially devastating consequences for individual Texans and for the economy.

Homeowner rates have gone through the roof this year in part because of claims and lawsuits concerning mold.

Never mind that mold has existed in Texas long before Texas was a state, or that our mothers commonly cleaned up the mess with bleach and water. Never mind also the lack of solid scientific basis for mold as the cause of dire health consequences such as memory loss or even death.

Legal seminars held in Texas during the past two years titled, "Mold for Gold," tell the tale. This is nothing more than a new profit center for personal injury lawyers. Unfortunately, those few plaintiff lawyers have taken home the "gold," leaving Texas homeowners holding the shovel.

In response to this explosive new litigation threat, insurers began settling cases and working with testing and "remediation" companies - which have an interest in maximizing the construction work at a home - to remove mold.

Ironically, hotels and apartments that provide temporary housing for displaced homeowners - as well as outdoor air - might have as high or higher levels of mold than the vacated house.

Air-testing, construction costs, temporary housing and a long list of other items have pushed the average mold claim to more than $7,000. Of course, homeowners are paying higher rates. The tooth fairy isn't going to cover these costs.

Another major insurance abuse is in the field of medicine.

Texas physicians can't catch a break in the squeeze between insurance companies and plaintiff lawyers. Certain plaintiff lawyers view Texas doctors not as providers of a necessity of life - good health care - but simply as a potential source of rich profits.

Specialists who deal in high-risk medical procedures, including obstetrics, neurology and orthopedics, have been the hardest hit because these procedures carry the greatest health risks. Some physicians know firsthand how a runaway zeal for lawsuits is driving up the cost of medicine.

Fourteen insurance companies stopped offering medical malpractice coverage in Texas in recent years, leaving only four companies in the marketplace.

Rates have increased as much as 300 percent in lawsuit-friendly venues in Texas, resulting in higher health insurance costs, extra (and often needless) tests and fewer doctors available to provide care.

At the heart of these issues is how a small group of plaintiffs' lawyers view the practice of law. The lawyer who battles long and hard to win justice for a victim of corporate greed is being replaced by the entrepreneurial law firms that focus on winning multimillion-dollar legal fees in lawsuits that might deliver only discount coupons to the "victim."

When the practice of law is transformed from a search for justice into a search for legal fees, the predatory practices of this small set of lawyers shred not just our civil justice system but whole sectors of our economy.

It is sadly ironic that many so-called consumer groups - who lately seem to represent the interests of personal injury lawyers - attack doctors, insurance companies, tort reformers and any elected official who does not think more lawsuits are the best answer to every problem in our society.

Those groups ignore the effect of so many more law school graduates, trial lawyer advertising, lax application of state bar ethical codes and disciplinary procedures, and the new philosophy "entrepreneurial law," even though these factors have a profound adverse impact on consumers.

Our society and our economy need a certain number of lawsuits. But they should be a last resort to ensure injustices are made right and harmed parties are made whole.

The answer to a more rational system of civil justice laws is neither to do away with lawsuits nor to continually expand the opportunity for litigation, but to more clearly and sensibly define in our laws and in the practice of law the difference between lawsuits driven by justice and those driven by greed.

Note: Bill Hammond of Austin is president and CEO of the Texas Association of Business, a broad-based organization representing more than 140,000 small and large Texas employers and 200 local chambers of commerce.